Robocars: a legal perspective

There was a time, recalls Baroness Waddingham of solicitors Cherry Jam in this week’s Postal Magazine, when driverless cars were “merely associated with science fiction”. Not any more!

In Japan, where Nissan’s driverless car was declared “street legal” in 2013, their effects, she reveals ominously, are already being felt. Meanwhile here in the UK cars without drivers are “expected to be on Milton Keynes’s pathways by 2017.” Soon they’ll be everywhere.

What does this mean? It means, Wadders explains, that “the motor insurance industry as we know it may fail to exist in 25 years’ time”.

So, cars are driven by people. Driverless cars are driven by robots, or by Google, or whatever. But the motor insurance industry, Wadders says, is “driven by claims.”

If cars stop crashing into other cars, where are all those claims supposed to come from?

Driverless cars pose the threat of a precipitous drop in “the number and severity of claims,” she writes, “which will naturally cause the motor insurance industry to shrink as the exposure to pay-outs reduces.”

In place of the magnificently dysfunctional melée we know and love today, the motor insurance market of the future might end up looking – perish the thought – more like the household insurance market, with “a much lower rate of claims but a much higher cost per incident.”

Why will costs be higher? Because “current predictions about the initial cost of a commercial driverless car” Baroness Waddingham reports, suggest they could cost “a staggering £170,000”.

Once everyone in the country has forked out the best part of 2 mil on a fancy new robocar, they are going to need – not just something more like a regular home insurance policy – but a distinctly HNW version thereof.

Never fear, however. If motor insurers can gain access to the mass of data generated by autonomous vehicles, it could “pave new business pathways” for them. Unless, of course, Google decides to keep all its user data to itself.

This “plethora of data,” Wadders maintains, could prove a pavement to badly needed “profit prospects” for “an industry which has failed to make an underwriting profit since 1994.”

Better still, driverless technology could boost demand for “cyber insurance” (because of all the new data it will create, or something).

Unless, by some chance, people get over the novelty of risks arising from the digital world, and so-called cyber insurance simply gets wrapped up in standard insurance products.

Sadly, Wadders reveals, the end of the RTA will spell unreservedly bad news for vehicle repair shops, who “will lose business due to the reduction in collisions”, the government who’ll lose all that money from speeding fines, and hospitals who’ll be forced to lay-off countless A&E staff, surgeons, anaesthetists, intensive care nurses, etc. etc,